It is commonly thought that arbitration benefits everyone since it prohibits someone from suing an entity (usually a corporation) for something that was allegedly done wrong. The common refrain is that, if businesses can’t be sued for perceived misdeeds, then the result should be lower prices for the consumer. Yeah, right. (Note: sarcasm). Arbitration sounds good until you are the person wronged. Then, if you have signed a binding arbitration agreement (look at any contract you have signed to purchase or finance a car), you are then prohibited from enforcing any rights you may have in court. Binding mandatory arbitration, in its purest form, prohibits a person from suing in a court of law and, instead, requires the matter to be submitted to and decided by an arbitrator.
This move toward arbitration has been going on by the business community for several years. Fortunately, the Consumer Financial Protection Bureau (CFPB) has recently proposed rules to dramatically change arbitration. This article from USA Today explains the proposed changes regarding arbitration.
Additionally, the link to the CFPB proposed rules regarding arbitration.
Also, here is an editorial on arbitration published by the New York Times on November 7, 2015.
Our best advice to consumers is to always be aware of what you are signing and to protect your consumer rights as best as you can. Always avoid signing any contract or document that contains an arbitration clause if at all possible. Finally, ask yourself why the merchant or business you are about to use won’t stand behind its service or product if they are demanding that you sign an arbitration agreement while you are purchasing their service or product.